Cheap WTI into Europe spells more trouble for Brent
Commentary summary:
– WTI Afras landing particularly cheap in Europe.
– ICE Brent spreads due for more weakness soon.
The weekend saw OPEC+ “surprise” the market with some 130kbd of production hikes on paper for November.
Apparently, this is a bullish signal for the market today, but I find it odd that something much bigger (for example the rumoured/leaked/denied plan for 3 tranches of 500kbd) were thought plausible in the first place, other than in the context of “a full-scale market share war”.
But on that topic, I think OPEC & partners are not ready or willing yet and remain on the path of least pain for price and ultimately their budget, whilst also keeping up the optics and messaging around market share.
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